When BMW began to integrate a service indicator (SI) back in the 1990's, computers and DME systems were very expensive, inefficient and everyone was scared of them. Some mechanics got themselves into a lot of trouble initially the service indicator didn't just reset itself after an oil change. That was something only a trained BMW technician could do. The well equipped mechanic impressed his BMW customers with a $4,000 laptop, running Windows 3.1 and a copy of Carsoft (Now called iCarsoft) that could display live data, read out fault codes and also reset the SI and clock symbol.
It didn't take long and some unscrupulous DIY enthusiasts figured out how the magic works and gave the trick away, resulting in aftermarket 'BMW SI reset units' that simply plug into the DLC socket under the bonnet. The rest was pretty basic, just a button that the user would press for a number of seconds...and that's it!
A reset unit can be purchased from Ebay and costs less than a tyre valve cap from BMW. It is undoubtedly the safest method of resetting the SI and brake fluid clock symbol. However, considering the simplicity and the certainty that I will not find my reset tool when I need it, I prefer the easier method described below. I have serviced my wife's E36 Z3 for the past 20 years and the method still works every time.
Reset direct at the DEM Connector using a wire bridge.
Make sure the ignition lock is in the OFF position. (Remove key if unsure)
Find the round, black data link connector (DLC) under the bonnet and remove the cap.
From the outer groove draw a line across the centre and find pin 7 on the opposite side. Mark pin 7 with a small drop of white paint or similar.
Turn the ignition to position 2 (dash lights up)
Use a piece of electrical wire, strip the ends and plug one end into pin 7 of the DLC. Hold the other end to the ground (bare metal part on the engine, minus of the battery or DLC pin 19.
Count roughly 4 seconds to reset the service indicator.
Count 10 seconds to reset the brake fluid clock symbol.
Turn the key back to the off position and check the result.
Don't forget to remove the wire and replace the DLC cap.
Out of the 20 pins in the socket only 9 are actually connected. It's a pretty basic interface with Pin 7 dedicated for the magic with the service and brake fluid resets.
TD - TD Signal
SI - Service Interval Reset
61 (D+) - Generator Charge Indicator
30 Voltage - Hot at all times
RXD - Diagnostic Data Link
15S Voltage - Ignition Switch in Run
PGSP - Programming Line
31 - Ground
TXD - Diagnostic Data Link